The trick to any competition in SL (especially a well-attended one!) is tank all your settings as low as they'll go (esp draw distance), then do something drastic like turn off prims. That usually gets rid of most of my lag, but in a game where we'd be playing with a ball of some sorts I don't think it'd be an option.
A friend of mine was one of the printers/producers for a sports RPG dice game called GRAV-BALL in the 1980s, a futuristic hockey-type game, in a gravity-less arena. Referees would do full body checks on you.
Theres a Mayan-type game in the Wastelands sims, cant remember the name of it. Coded pretty well except the ball gets lost sometimes, just like in real life.